NYSE Compliance Challenge
loanDepot Faces NYSE Deficiency Notice, Considers Reverse Stock Split to Restore Compliance
Key Points
In the second quarter, loanDepot posted a net loss of $6.6 million, but revenue rose 18% to $337.3 million, originations increased to nearly $8 billion (up 4%), and gain on sale margin rose to 3.45%, reflecting a higher home equity mix.
The company is expanding into home equity lending and has re-entered wholesale lending as part of its transformation plan.
Under its transformation, unit volume grew 25%, revenue grew 18%, and purchase market share grew 33% in the last quarter.
The NYSE cure can be satisfied by meeting the $1.00 minimum share price on the last trading day of any calendar month during the six-month cure period, a provision noted in NYSE listings guidance.
loanDepot is licensed to operate in all 50 states and offers a broad range of mortgage and home equity products.
loanDepot has six months to fix a major problem: its stock price. The New York Stock Exchange sent the mortgage lender a deficiency letter after its Class A shares traded below $1.00 for 30 consecutive days Orange County Business Journal. The company is exploring a reverse stock split to regain compliance, a move that would need shareholder approval at its annual meeting expected in early June 2027 TipRanks. No immediate threat hangs over the company's listing or operations.
Despite the stock price trouble, loanDepot is showing business momentum. In the second quarter, the company grew revenue 18% to $337.3 million and boosted originations to nearly $8 billion, up 4% Housing Wire. Unit volume jumped 25% and purchase market share climbed 33% as the company shifted focus toward home equity lending and re-entered wholesale channels TipRanks.
The Stock Price Problem and Six-Month Cure Window
NYSE rules require a minimum $1.00 average closing price. loanDepot fell short for 30 trading days straight, triggering the deficiency notice in late August 2026 Investing.com. Under NYSE rules, the company has until the last trading day of any month within six months to hit the $1.00 threshold and cure the violation Trading View. The clock started ticking after the notice arrived.
Management stressed that curing the deficiency is a priority. The company is weighing a reverse stock split as the most practical path forward TipRanks. Any reverse split needs shareholder sign-off at the annual meeting. Founder and CEO Anthony Hsieh emphasized the company is pursuing strategies to create sustainable value for shareholders as it tackles this compliance challenge.
Revenue Growth and Profit Headwinds in Q2
loanDepot reported a net loss of $6.6 million in the second quarter, but the top line grew. Revenue climbed 18% to $337.3 million Housing Wire. Total originations reached nearly $8 billion, up 4% from the prior year. Gain on sale margin expanded to 3.45%, reflecting a richer product mix skewed toward higher-margin home equity loans TipRanks.
The shift in strategy is working operationally, even if profits remain elusive. Unit volume surged 25% during the transformation push. Purchase market share grew 33% in the last quarter TipRanks. The company re-entered wholesale lending and expanded home equity offerings to diversify revenue streams and improve margins.
Strategic Pivot Toward Home Equity and Wholesale
loanDepot is betting big on home equity lending to shore up margins and revenue. The company exited this market years ago but is now making it central to its transformation plan. Higher-margin home equity loans are pulling the overall gain on sale margin to 3.45%, up from prior quarters TipRanks. This product mix shift is one reason revenue grew 18% despite the modest 4% bump in originations volume.
Wholesale lending is another key pillar. loanDepot stepped back from this channel but is re-entering now to reach more borrowers through partner brokers TipRanks. Combined with its retail and correspondent channels, the company is licensed to operate in all 50 states. The diversified approach aims to generate sustainable profitable market share growth as CEO Hsieh pursues his longer-term value creation roadmap.
What's Next: Shareholder Vote Expected June 2027
The reverse stock split is not automatic. loanDepot must get shareholder approval, which will happen at the annual meeting expected in early June 2027 TipRanks. If approved, the split would lower the share count and boost the per-share price mathematically, helping the company clear the $1.00 NYSE hurdle. Management has until the end of the six-month cure period to execute this plan or find another remedy.
For now, operations continue normally. The deficiency notice does not interrupt trading, SEC reporting, or business activities Orange County Business Journal. loanDepot's leadership is confident the company can resolve the listing issue while pressing ahead with its transformation. The mortgage lender is focusing on profitable growth and shareholder value creation in a competitive market.
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